Bankruptcy should be the last step

Many legal firms will promote bankruptcy as the answer to your credit problems. That is a significant decision that will affect your life for up to 10 years. Don't be fooled by those who offer bankruptcy as a quick fix. Filing for bankruptcy should be your last resort.

Types of bankruptcy

If you declare bankruptcy

• It may be difficult to rent an apartment or qualify for a home loan for 7-10 years.
• It could affect your ability to find a job, since many employers are now using credit reports as part of their screening process.
• It could affect your ability to sign up for utilities and other basic services, or it could mean you'll be asked for a hefty deposit.
• It can affect your auto and homeowner's insurance rates.

Common misconceptions about bankruptcy

• You're still going to have to learn to live on what you earn.
• You can get credit after bankruptcy. Maybe, but it will be very expensive. Even if you qualify, most loans may carry interest rates as much as twice as high as if you have good credit.